SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended January 31, 1997
                               -------------------------------------------------

Commission file number 0-11254
                      ----------------------------------------------------------

                                 COPYTELE, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             Delaware                                      11-2622630
-------------------------------                         ------------------
(State or other jurisdiction of                         (I.R.S. employer
 incorporation or organization)                         identification no.)


       900 Walt Whitman Road
       Huntington Station, NY                                11746
--------------------------------------------------------------------------------
(Address of principal executive offices)                  (Zip Code)


                                 (516) 549-5900
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes  [X]    No [_]

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.


Number of shares of common stock, par value $.01 per share, outstanding as of
March 10, 1997:                                             57,590,356 shares
                                                            -----------------
<PAGE>


                                TABLE OF CONTENTS


Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

         Condensed Balance Sheets (Unaudited) as of January 31, 1997 and
         October 31, 1996

         Condensed Statements of Operations (Unaudited) for the three months
         ended January 31, 1997 and January 31, 1996, and for the period from
         November 5, 1982 (Inception) through January 31, 1997

         Condensed Statement of Shareholders' Equity (Unaudited) for the period
         from November 5, 1982 (Inception) through January 31, 1997

         Condensed Statements of Cash Flows (Unaudited) for the three months
         ended January 31, 1997 and January 31, 1996, and for the period from
         November 5, 1982 (Inception) through January 31, 1997

         Notes to Condensed Financial Statements (Unaudited)

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Part II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

         Signatures.


<PAGE>


                         Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.
<TABLE>
<CAPTION>

                                                  COPYTELE, INC.
                                           (Development Stage Enterprise)
                                       CONDENSED BALANCE SHEETS (UNAUDITED)


                                                                           January 31, 1997         October 31, 1996
                                                                         -------------------      -------------------
<S>                                                                     <C>                       <C>
                                     ASSETS

CURRENT ASSETS:
Cash (including cash equivalents and interest bearing accounts of
  $19,339,936 and $21,921,133, respectively)                                    $19,546,294              $22,165,892
Accrued interest receivable                                                           9,441                   49,306
Prepaid expenses and other current assets                                         1,484,782                  378,417
                                                                         -------------------      -------------------
                                                                                 21,040,517               22,593,615

PROPERTY AND EQUIPMENT (net of accumulated depreciation and
  amortization of $879,955 and $816,651, respectively)
                                                                                    880,054                  830,606

INVESTMENT IN JOINT VENTURE (Note 2)                                                989,540                1,058,557
OTHER ASSETS                                                                        172,419                  227,642
DEFERRED TAX BENEFITS (net of valuation allowance of  $25,174,000 and
  $25,308,000, respectively)                                                      -                        -
                                                                         -------------------      -------------------
                                                                                $23,082,530              $24,710,420
                                                                         ===================      ===================


                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued liabilities                                        $ 1,472,407              $ 1,960,147
                                                                         -------------------      -------------------

SHAREHOLDERS' EQUITY:
Preferred stock, par value $100 per share; authorized 500,000 shares;
  no shares outstanding                                                          -                        -
Common stock, par value $.01 per share; authorized 120,000,000 shares;
  outstanding 57,478,656 and 57,404,656 shares, respectively
                                                                                    574,787                  574,047
Additional paid-in capital                                                       51,164,161               50,934,606
Accumulated (deficit) during development stage                                 (30,128,825)             (28,758,380)
                                                                         -------------------      -------------------
                                                                                 21,610,123               22,750,273
                                                                         -------------------      -------------------
                                                                                $23,082,530              $24,710,420
                                                                         ===================      ===================
</TABLE>

The accompanying notes to condensed financial statements are an integral part of
these balance sheets.

<PAGE>


<TABLE>
<CAPTION>


                                                           COPYTELE, INC.
                                                   (Development Stage Enterprise)
                                           CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                                                                   
                                                                                                   
                                                                For the three months                         For the period from  
                                                                 ended January 31,                             November 5,1982    
                                                  -------------------------------------------------          (inception) through  
                                                          1997                        1996                    January 31, 1997
                                                  ---------------------       ---------------------        ------------------------


<S>                                               <C>                        <C>                           <C>     
SALES                                               $      -                   $      -                         $      -
                                                  ---------------------       ---------------------        ------------------------


SELLING, GENERAL AND 
  ADMINISTRATIVE EXPENSES,
 (including research and development
  expenses of approximately $898,000,
  $767,000 and $21,641,000, respectively)                    1,562,504                   1,075,396                      33,542,713
                                                  ---------------------       ---------------------        ------------------------

LOSS FROM JOINT VENTURE                                         69,017                      12,872                         235,460
                                                  ---------------------       ---------------------        ------------------------

INTEREST INCOME                                                261,076                     116,949                       3,649,348
                                                  ---------------------       ---------------------        ------------------------

NET (LOSS)                                                ($1,370,445)                  ($971,319)                   ($30,128,825)
                                                  =====================       =====================        ========================


NET (LOSS) PER SHARE OF COMMON STOCK                           ($0.02)                     ($0.02)                         ($0.67)
                                                  =====================       =====================        ========================


WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING              57,423,102                  52,335,450                      45,277,367
                                                  =====================       =====================        ========================
</TABLE>

The accompanying notes to condensed financial statements are an integral part of
these statements.



<PAGE>

<TABLE>
<CAPTION>

                                                           COPYTELE, INC.
                                                   (Development Stage Enterprise)
                                            CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                       FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION) THROUGH JANUARY 31, 1997 (UNAUDITED)

                                                                                                                        Accumulated
                                                                                                                         (Deficit)
                                                                                                        Additional         During
                                                                            Common Stock                 Paid-in        Development
                                                                           Shares Par Value              Capital           Stage
                                                                  -----------------------------   ---------------    ---------------

<S>                                                                 <C>          <C>               <C>                  <C>  
BALANCE, November 5, 1982 (inception)                                   -        $    -            $    -               $   -
Sale of common stock, at par, to incorporators on November 8,
  1982                                                                1,470,000         14,700          -                   -
Sale of common stock, at $.10 per share, primarily to officers
  and employees from November 9, 1982 to November 30, 1982              390,000          3,900            35,100            -
Sale of common stock, at $2 per share, in private offering from
  January 24, 1983 to March 28, 1983                                    250,000          2,500           497,500            -
Sale of common stock, at $10 per share, in public offering on
  October 6, 1983, net of underwriting discounts of $1 per share        690,000          6,900         6,203,100            -
Sale of 60,000 warrants to representative of underwriters, at
  $.001 each, in conjunction with public offering                       -             -                       60            -
Costs incurred in conjunction with private and public offerings         -             -                (362,030)            -
Common stock issued, at $12 per share, upon exercise of 57,200 
  warrants from February 5, 1985 to October 16, 1985, net of
  registration costs                                                     57,200            572           630,845            -
Proceeds from sales of common stock by individuals from January
  29, 1985 to October 4, 1985 under agreements with the Company,
  net of costs incurred by the Company                                  -             -                  298,745            -
Restatement as of October 31, 1985 for three-for-one stock split      5,714,400         57,144          (57,144)            -
Common stock issued, at $4 per share, upon exercise of 2,800
  warrants in December 1985                                               8,400             84            33,516            -
Sale of common stock, at market, to officers on January 9, 1987
  and April 22, 1987 and to members of their immediate families
  on July 28, 1987                                                       67,350            674           861,726            -
Restatement as of July 31, 1987 for five-for-four stock split         2,161,735         21,617          (21,617)            -
Fractional share payments in conjunction with five-for-four
  stock split                                                           -             -                  (1,345)            -
Sale of common stock, at market, to members of officers'
  immediate families from September 10,1987 to December 4, 1990
  and to officers on October 29, 1987 and February 26, 1989             628,040          6,280         6,124,031            -
Sale of common stock, at market, to senior level personnel on
  February 26, 1989                                                      29,850            299           499,689            -


                                                                                                                   Continued
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                            COPYTELE, INC.
                                                   (Development Stage Enterprise)
                                            CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                       FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION) THROUGH JANUARY 31, 1997 (UNAUDITED)

                                                             Continued

                                                                                           
                                                                                                                     Accumulated    
                                                                                                                      (Deficit)     
                                                                  Common Stock                  Additional        During Development
                                                           Shares          Par Value         Paid-in Capital            Stage       
                                                      ----------------------------------    -----------------    -------------------
<S>                                                    <C>                <C>                  <C>                <C> 
Sale of common stock, at market, to 
   unrelated party on February 26, 1989 
   amended on March 10, 1989                                    35,820              358                599,627            -
Restatement as of January 31, 1991 for
  two-for-one stock split                                   11,502,795          115,028              (115,028)            -
Sale of common stock, at market, to members of
  officers' immediate families from April 26, 1991
  to October 27, 1992                                          261,453            2,615              2,788,311            -
Common stock issued upon exercise of warrants by
  members of officers' immediate families on various
  dates from September 1993 through March 1996                 579,800            5,798              2,651,462            -
Common stock issued upon exercise of stock 
  options from December 16, 1992 to June 12, 1996            4,535,340           45,353             28,197,223            -
Restatement as of June 17, 1996 for two-for-one
  stock split                                               28,382,183          283,822              (283,822)            -
Common stock issued upon exercise of warrants by
  members of officers' immediate families on various
  dates in July and October, 1996                              107,790            1,078                559,262            -
Common stock issued upon exercise of stock
   options from July 8, 1996 to January 31, 1997
   under stock option plans, net of registration costs         606,500            6,065              2,024,950            -
Accumulated (deficit) during development stage                  -                 -                    -               (30,128,825)
                                                      ----------------- ----------------    -------------------  -------------------
BALANCE, January 31, 1997                                   57,478,656     $    574,787            $51,164,161        ($30,128,825)
                                                      ================= ================    ===================  ===================
</TABLE>

The accompanying notes to condensed financial statements are an integral part of
this statement.



<PAGE>
<TABLE>
<CAPTION>


                                                           COPYTELE, INC.
                                                   (Development Stage Enterprise)
                                           CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)



                                                                                                        
                                                                          For the three                 
                                                                          months ended                      For the period from
                                                                           January 31,                        November 5, 1982 
                                                          ----------------------------------------------    (inception) through
                                                                 1997                       1996              January 31, 1997
                                                          --------------------       -------------------  -------------------------
<S>                                                       <C>                        <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments to suppliers, employees and
  consultants                                                    ($2,925,181)                ($879,112)              ($33,032,914)
Interest received                                                     300,941                   129,496                  3,639,908
                                                          --------------------       -------------------  -------------------------
Net cash (used in) operating activities                           (2,624,240)                 (749,616)               (29,393,006)
                                                          --------------------       -------------------  -------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property and
  equipment                                                         (225,653)                   (4,453)                (1,574,648)
Disbursements to acquire certificates of deposit and
  corporate notes and bonds                                        -                         -                        (12,075,191)
Proceeds from maturities of investments                            -                         -                          12,075,191
Investment made in Joint Venture                                   -                          (490,000)                (1,225,000)
                                                          --------------------       -------------------  -------------------------
Net cash (used in) investing activities                             (225,653)                 (494,453)                (2,799,648)
                                                          --------------------       -------------------  -------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock and warrants, net of
  underwriting discounts of $690,000 related to initial
  public offering in October 1983                                  -                         -                          17,647,369
Proceeds from exercise of stock options and warrants,
  net of registration disbursements                                   230,295                 2,557,714                 34,156,209
Proceeds from sales of common stock by individuals under
  agreements with the Company, net of disbursements made
  by the Company                                                   -                         -                             298,745
Disbursements made in conjunction with sales of stock              -                         -                           (362,030)
Fractional share payments in conjunction with stock split          -                         -                             (1,345)
                                                          --------------------       -------------------  -------------------------
Net cash provided by financing activities                             230,295                 2,557,714                 51,738,948
                                                          --------------------       -------------------  -------------------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS               (2,619,598)                 1,313,645                 19,546,294

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   22,165,892                 8,864,293              -
                                                          --------------------       -------------------  -------------------------
CASH AND CASH EQUIVALENTS AT END OF
  PERIOD                                                          $19,546,294               $10,177,938                $19,546,294
                                                          ====================       ===================  =========================
                                                                                                                        Continued

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                              COPYTELE, INC.
                                      (Development Stage Enterprise)
                              CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                Continued

                                                                                                    
                                                                        For the three               
                                                                        months ended                       For the period from 
                                                                         January 31,                         November 5, 1982  
                                                          ------------------------------------------       (inception) through 
                                                                 1997                    1996                January 31, 1997
                                                          -------------------      -----------------      -----------------------
<S>                                                       <C>                      <C>                    <C>  
RECONCILIATION OF NET (LOSS) TO NET CASH (USED IN)
  OPERATING ACTIVITIES:
Net (loss)                                                       ($1,370,445)             ($971,319)                ($30,128,825)
Loss from Joint Venture                                               69,017                 12,872                      235,460
Depreciation and amortization                                         63,304                 18,724                      884,596
Increase (Decrease) in accrued interest receivable                    39,865                 12,547                       (9,441)
(Increase) in prepaid expenses and other current assets           (1,106,365)                (2,316)                  (1,484,782)
(Increase) Decrease in other assets                                   55,223                    (86)                    (172,419)
Increase (Decrease) in accounts payable and accrued
  liabilities related to operating activities                       (374,839)               179,962                    1,282,405
                                                          -------------------      -----------------      -----------------------
Net cash (used in) operating activities                          ($2,624,240)             ($749,616)                ($29,393,006)
                                                          ===================      =================      =======================

</TABLE>

The accompanying notes to condensed financial statements are an integral part of
these statements.





<PAGE>



                                 COPYTELE, INC.
                        (Development Stage Enterprise)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                          JANUARY 31, 1997 (UNAUDITED)


(1)      Summary of significant accounting policies and other disclosures:

         The Company is a party to a joint venture located in Shanghai, China
         with Shanghai Electronic Components Corp. ("SECC") and Shanghai
         International Trade and Investment Developing Corp. ("SIT"). The
         Company owns a 55% interest in the capital, profits and losses of the
         joint venture, Shanghai CopyTele Electronics Co., Ltd. ("SCE" or "Joint
         Venture"). The remaining 45% is owned by two Chinese companies, SECC
         which owns 35% of the Joint Venture and SIT which owns 10%. (See Note
         2, Investment in Joint Venture). The Company, pursuant to a Technology
         License Agreement, has licensed its flat panel application technology
         to the Joint Venture for exclusive use in China. The Company is solely
         authorized to market Joint Venture products outside China. Reference is
         made to "Management's Discussion and Analysis of Financial Condition
         and Results of Operations" for further discussion involving the Joint
         Venture. The Company and SECC have signed a Letter of Intent with
         respect to a second joint venture which would manufacture and sell
         electronic components and parts used in SCE's products and in products
         of other manufacturers (the "Second Joint Venture").

         The Company has produced a telephone based multi-functional
         telecommunications product, incorporating the Company's flat panel and
         associated proprietary hardware and software technology called
         MAGICOM(R) 2000. The product can enable users to have a personal
         information center in a single unit which integrates voice
         communication, digital messaging, fax (transmission and paperless
         reception), copier, electronic handwriting, touch sensitive screen,
         data storage and transmission, and computer interfacing.

         Reference is made to the October 31, 1996 audited financial statements
         and notes thereto included in the Company's Annual Report on Form 10-K
         for the fiscal year ended October 31, 1996, for more extensive
         disclosures than contained in these condensed financial statements.

         The Company, which controls four of the seven votes of SCE's board of
         directors, has reflected its investment in the Joint Venture under the
         equity method of accounting in the accompanying condensed financial
         statements. Under certain circumstances, decisions involving the Joint
         Venture require either a unanimous or two-thirds vote of SCE's board of
         directors.

         The information contained herein for the three month periods ended
         January 31, 1997 and 1996 and for the period from November 5, 1982
         (inception) through January 31, 1997 is unaudited, but in the opinion
         of the Company, all adjustments (consisting only of normal recurring
         adjustments) considered necessary for a fair presentation of the
         results of operations for such periods have been included. The results
         of operations for interim periods may not necessarily reflect the
         annual operations of the Company.

         The Company invests principally in short term highly liquid financial
         instruments with maturities of less than three months, which have been
         classified as cash equivalents in



                                       9
<PAGE>

         the accompanying condensed balance sheets. The cost of these
         investments approximates market value.

         The Company has adopted all recently issued accounting standards which
         have a material impact on its condensed financial statements. The
         Company has implemented Statement of Financial Accounting Standards
         ("SFAS") No. 123, "Accounting for Stock Based Compensation" as
         disclosed in Note 3.

(2)      Investment in Joint Venture:

         The Company has contributed $1,225,000 in cash, and technology which
         has been valued for purposes of the Joint Venture at $700,000. The
         Joint Venture does not reflect the $700,000 in technology as an asset
         or equity investment in the condensed financial statements presented
         below. SECC and SIT have contributed cash aggregating $1,575,000. The
         Company has reflected its investment in the Joint Venture under the
         equity method of accounting (see Note 1, Summary of significant
         accounting policies and other disclosures) and will recognize losses on
         the Joint Venture to the extent of its cash investment.

         Condensed Balance Sheets for SCE at January 31, 1997 and October 31,
         1996 and Condensed Statements of Operations for the three month periods
         ended January 31, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>
                                                     Condensed Balance Sheets
                                                     ------------------------
                                                            (Unaudited)

                                                                      January 31, 1997         October 31, 1996
                                                                     -------------------      --------------------
<S>                                                                  <C>                      <C>        
           Cash                                                            $     75,260               $   726,640
           Inventories                                                        1,057,397                         -
           Other current assets                                                  54,622                   266,409
           Land occupancy rights, net                                           303,586                   308,516
           Fixed assets, net                                                    915,730                   145,643
           Construction in progress                                             840,486                   878,533
           Restricted cash                                                            -                   275,245
           Deposits                                                             237,035                   184,601
                                                                     -------------------      --------------------
                Total Assets                                                 $3,484,116                $2,785,587
                                                                     ===================      ====================

           Notes payable                                                    $   220,011               $         -
           Accounts payable                                                     839,825
           Accrued expenses                                                      52,389                   288,210
           Capital                                                            2,371,891                 2,497,377
                                                                     -------------------      --------------------
                Total Liabilities and Capital                                $3,484,116               $2,785,587
                                                                     ===================      ===================
</TABLE>
<TABLE>
<CAPTION>

                                            Condensed Statements of Operations
                                            ----------------------------------
                                                         (Unaudited)

                                                                             For the three months ended
                                                                     --------------------------------------------
                                                                      January 31, 1997         January 31, 1996
                                                                     -------------------      -------------------
<S>                                                                  <C>                      <C>
           Net sales                                                        $     -                   $    -
           Operating (loss)                                                   (129,653)                 (26,793)
           Other income/(expense)                                                 4,167                    3,390
                                                                     -------------------      -------------------
           Net (loss)                                                        ($125,486)                ($23,403)
                                                                     ===================      ===================
</TABLE>

                                       10
<PAGE>

(3)      Stock option plans:

         The Company has two stock option plans, the 1987 Stock Option Plan,
         adopted by the Board of Directors on April 1, 1987 (the "1987 Plan"),
         and the CopyTele, Inc. 1993 Stock Option Plan, adopted by the Board of
         Directors on April 28, 1993 (the "1993 Plan").

         Statement of Financial Accounting Standards ("SFAS") No. 123,
         "Accounting for Stock Based Compensation", encourages, but does not
         require companies to record compensation cost for stock-based employee
         compensation plans at fair value. The Company has chosen to continue to
         account for stock-based compensation using the intrinsic value method
         prescribed in Accounting Principles Board Opinion ("APB") No. 25,
         "Accounting for Stock Issued to Employees", and related
         interpretations. Compensation cost for stock options is measured as the
         excess, if any, of the quoted market price of the Company's stock at
         the date of grant over the amount an employee must pay to acquire the
         stock. Accordingly, under APB Opinion No. 25, no compensation cost has
         been recognized by the Company.

         Had compensation cost for these plans been determined consistent with
         SFAS Statement No. 123, the Company's net loss and net loss per share
         would have increased to the following pro forma amounts:
<TABLE>
<CAPTION>

                                                             For the Three Months Ended         For the Three Months Ended
                                                                   January 31, 1997                   January 31, 1996
                                                                   ----------------                   ----------------

<S>                                                                <C>                                  <C>       
          Net Loss:          As Reported                              ($1,370,445)                         ($971,319)

                             Pro Forma                                ($4,352,009)                       ($2,156,712)
          Net Loss
          Per Share:         As Reported                                   ($0.02)                            ($0.02)

                             Pro Forma                                     ($0.08)                            ($0.04)
</TABLE>

         The fair value of each option grant is estimated on the date of grant
         using the Black-Scholes option pricing model with the following
         weighted average assumptions used for grants for the three months ended
         January 31, 1997 and 1996, respectively: risk free interest rates of
         6.24% and 5.62%; expected dividend yields of 0% and 0%; expected lives
         of 1.62 and 2.56 years; and expected stock price volatility of 73% and
         69%. The weighted average fair value of options granted under Statement
         123 for the three months ended January 31, 1997 and 1996 are $2.27 and
         $2.19, respectively.

         Information regarding the 1987 Plan from October 31, 1996 to January
         31, 1997, after adjustments for the two-for-one stock split declared in
         May 1996, is presented in the table and narrative below:
<TABLE>
<CAPTION>

                                                                              
                                                                                       Current Weighted Average  
                                                                        Shares         Exercise Price Per Share  
                                                                        ------         ------------------------

<S>                                                             <C>                       <C>  
           Shares under option at October 31, 1996                     754,360                   $4.75

           Exercised                                                   (25,000)                  $2.75
                                                                  -------------------
           Shares under option at January 31, 1997                     729,360                   $4.82

           Exercisable at January 31, 1997                             729,360                   $4.82
                                                                  ===================
</TABLE>



                                       11
<PAGE>

         The exercise price with respect to each option granted under the 1987
         Plan from its inception was equal to at least the fair market value of
         the underlying common stock of the Company (the "Common Stock") on the
         date of grant. Upon the approval of the 1993 Plan by the Company's
         shareholders in July 1993, the 1987 Plan was terminated with respect to
         the grant of future options.

         From February 1, 1997 through March 10, 1997, the Company received
         proceeds aggregating approximately $76,100 relating to the exercise of
         options to purchase 23,200 shares of Common Stock pursuant to the 1987
         Plan.

         The 1993 Plan was amended as of May 3, 1995 and May 10, 1996 to, among
         other things, increase the number of shares of the Company's Common
         Stock available for issuance pursuant to grants thereunder from 6
         million to 20 million, as adjusted for the two-for-one stock split
         declared in May 1996. Information regarding the 1993 Plan from October
         31, 1996 to January 31, 1997 after adjustments for the two-for-one
         stock split declared in May 1996, is presented in the table and
         narrative below:

<TABLE>
<CAPTION>

                                                                               
                                                                                         Current Weighted Average 
                                                                        Shares           Exercise Price Per Share
                                                                        ------           ------------------------
<S>                                                              <C>                     <C> 
           Shares under option at October 31, 1996                           9,174,860            $5.32

           Granted                                                           1,785,500            $4.72

           Exercised                                                           (49,000)           $3.54

           Canceled                                                            (13,000)           $5.17
                                                                 ----------------------
           Shares under option at  January 31, 1997                         10,898,360            $5.34

           Exercisable at  January 31, 1997                                  5,767,860            $5.34
                                                                 ======================

</TABLE>

         The exercise price with respect to each option granted under the 1993
         Plan from its inception was equal to at least the fair market value of
         the underlying Common Stock on the date of grant. At January 31, 1997,
         4,257,500 options were available for future grants under the 1993 Plan.

         From February 1, 1997 through March 10, 1997, the Company received
         proceeds aggregating approximately $374,407 relating to the exercise of
         options to purchase 88,500 shares of Common Stock pursuant to the 1993
         Plan.

         As of March 10, 1997, 5,679,360 of the options to purchase shares of
         Common Stock granted and outstanding under the 1993 Plan were
         exercisable.

(4)      Warrants to purchase common stock:

         Information from October 31, 1996 to January 31, 1997 regarding
         warrants previously issued by the Company, primarily to members of the
         immediate families of its Chairman of the Board and its President in
         conjunction with the sale of its Common Stock, after adjustments for
         anti-dilutive provisions and the two-for-one stock split declared in
         May 1996, is as follows:

                                       12
<PAGE>

<TABLE>
<CAPTION>


                                                                                                Current Weighted
                                                                                                Average Exercise
                                                                              Shares            Price Per Share
                                                                              ------            ---------------

<S>                                                                      <C>                       <C>   
           Shares covered by warrants at October 31, 1996                     415,116                 $ 5.11
           Warrants exercised                                                    -                    $    -
           Warrants expired                                                  ( 97,296)                $ 4.50
                                                                         ------------------
           Shares covered by warrants at January 31, 1997                     317,820                 $ 5.27
                                                                         ==================
</TABLE>


         The exercise price of each warrant was equal to at least the fair
         market value of the underlying Common Stock on the date of issuance of
         such warrant. As of January 31, 1997, all of the warrants to purchase
         shares of Common Stock issued and outstanding were exercisable.

(5)      Stock Split:

         On May 24, 1996 the Company declared a two-for-one stock split,
         effected in the form of a 100% stock dividend, payable on June 17, 1996
         to shareholders of record as of June 4, 1996. The weighted average
         number of shares outstanding and net loss per share amounts in the
         accompanying financial statements have been restated to reflect the
         stock split.

         Item 2.  Management's Discussion and Analysis of Financial
                      Condition and Results of Operations.

         The Company, which is a development stage enterprise, was incorporated
         on November 5, 1982 and has had no revenues to support its operations
         since its inception. The Company's principal activities are the
         development of telephone based multi-functional telecommunications
         products incorporating the Company's ultra-high resolution flat panel
         display, the further expansion of its overall flat panel technology,
         and the operations of SCE, the Company's 55% owned joint venture in
         China. The Company's interest in SCE is accounted for under the equity
         method of accounting (see Notes 1 and 2 to the Company's condensed
         financial statements). During 1996, the Company also increased its
         efforts to develop ultra-high resolution video and color capability for
         its overall flat panel display technology. There can be no assurance,
         however, that the Company's efforts in this area will be successful.
         There is also no assurance that the Company will generate significant
         revenues in the future, will have sufficient revenues to generate
         profits or that other products will not be produced by other companies
         that will render the products of the Company or SCE obsolete or
         unmarketable.

         The Company has entered into marketing agreements with distributors in
         several countries throughout the world. These agreements are for terms
         of three years and provide for the purchase of the distributors'
         requirements of the Company's MAGICOM(R) 2000 product in their
         respective territories. The agreements provide for monthly purchase
         orders in increasing quantities, to be accompanied by irrevocable bank
         letters of credit furnished by the distributors.

         The Company and SCE are in their initial stages of production and
         marketing. The eventual success and profitability of their product will
         depend upon many factors, including those normally associated with any
         new product. These factors include the capability of SCE to produce
         sufficient quantities of MAGICOM(R) 2000; the ability of the Company
         and SCE to maintain an acceptable pricing level to end-users for the
         product;



                                       13
<PAGE>

         long-term product performance and the capability of the Company, SCE
         and its distributors to adequately service the product; the ability of
         distributors to market their contracted quantities of the product in
         their respective territories; political and economic stability in
         targeted marketing territories; and the possible development of
         competitive products that could render the product of the Company and
         SCE obsolete or unmarketable.

         In reviewing Management's Discussion and Analysis of Financial
         Condition and Results of Operations, reference is made to the Company's
         Condensed Financial Statements and the notes thereto.

         Safe Harbor Statement Under the Private Securities Litigation Reform
         Act of 1995 Except for the historical information contained herein, the
         matters discussed in this Quarterly Report on Form 10-Q are
         forward-looking statements relating to future events which involve
         certain risks and uncertainties, including those identified herein and
         in the Company's Annual Report on Form 10-K for the fiscal year ended
         October 31, 1996 (the "1996 10-K"). See "Business" and Note 1 to the
         Company's Financial Statements contained in the 1996 10-K for
         discussions regarding uncertainties that may significantly affect the
         results of operations, future liquidity and capital resources.

         Results of Operations

         Selling, general and administrative expenses for the three month
         periods ended January 31, 1997 and 1996 and for the period from
         November 5, 1982 (inception) through January 31, 1997 were
         approximately $1,563,000, $1,075,000, and $33,543,000, respectively.
         These amounts include research, development and tooling costs of
         approximately $898,000, $767,000, and $21,641,000, respectively, as
         well as normal operating expenses. The increase of approximately
         $488,000 in selling, general and administrative expenses during the
         three months ended January 31, 1997 as compared to the same period in
         1996 resulted primarily from increases in marketing expenses and
         compensation (and related costs) necessitated by the present phase of
         the Company's development program and related activities. Marketing
         costs increased during the fiscal 1997 period as a result of the
         opening and staffing of a marketing office, retention of public
         relations and advertising firms and the production of advertising
         materials. Compensation and related costs, rent and travel expenditures
         increased for the fiscal 1997 period as a result of the Company's
         adding personnel in marketing and engineering and increasing the size
         of its facilities. Professional fees, especially patent application
         preparation and filing fees, decreased during the fiscal 1997 period.

         The Company's portion of SCE's loss during the fiscal 1997 period
         increased by approximately $56,000, from approximately $13,000 in the
         1996 period, to approximately $69,000 in the fiscal 1997 period, as a
         result of SCE's commencing the initial stages of production of
         MAGICOM(R) 2000.

         Since November 1985, the Company's Chairman of the Board and its
         President have waived salary and related pension benefits for an
         undetermined period of time. Four other individuals, including a former
         officer and senior level personnel, waived salary and related pension
         benefits from January 1987 through December 1990. Commencing in January
         1991, these four individuals waived such rights for an undetermined
         period of time and they did not receive salary or related pension
         benefits through December 1992. The Company's Chairman of the Board,
         its President and the three senior level personnel continued to waive
         such rights commencing in January 1993 for an undetermined period of
         time. One additional senior level employee also is currently waiving
         such salary and benefit rights for an undetermined period of time.

                                       14
<PAGE>

         The increase in interest income of $144,000 during the three months
         ended January 31, 1997 as compared to the same period in 1996 primarily
         resulted from an increase in funds available for investment aided by
         slightly higher interest rates. Funds available for investment during
         the three month periods ended January 31, 1997 and 1996, on a monthly
         weighted average basis, were approximately $20,204,000 and $9,377,000,
         respectively. The investment instruments selected by the Company are
         principally money market accounts and commercial paper.

         Liquidity and Capital Resources

         Since its inception, the Company has met its liquidity and capital
         expenditure needs primarily from the proceeds of the sales of Common
         Stock in its initial public offering, in private placements, upon
         exercise of warrants issued in connection with the private placements
         and public offering, and upon exercise of stock options pursuant to the
         1987 Plan and the 1993 Plan.

         From November 1, 1996 to January 31, 1997, the Company received
         proceeds aggregating approximately $242,000 relating to the exercise of
         options to purchase 74,000 shares of Common Stock under the 1987 and
         1993 Plans. In addition, from February 1, 1997 to March 10, 1997, the
         Company received proceeds aggregating approximately $451,000 relating
         to the exercise of options to purchase 111,700 shares of Common Stock
         under the 1987 and 1993 Plans.

         SCE contemplates an initial investment of $7,000,000, of which half is
         expected to be borrowed from banks, and capital investment of
         $3,500,000. The Company has contributed $1,225,000 in cash, and
         technology valued for the purposes of SCE at $700,000, and SECC and SIT
         have contributed $1,575,000 in cash to SCE (see Notes 1 and 2 to the
         Company's condensed financial statements). The Joint Venture may
         require capitalization of up to $25 million, depending upon the nature
         and extent of its business activities.

         On April 17, 1996, the Company entered into a letter of intent for the
         formation of a second joint venture with SECC. The parties are
         presently discussing amendments to the letter of intent. As stipulated
         in the letter of intent, unless otherwise amended, the Second Joint
         Venture is expected to have an initial capitalization of approximately
         $2,000,000, of which half would consist of bank borrowings. The Company
         would invest cash of approximately $550,000 and SECC would contribute
         cash, equipment and technology collectively valued at $450,000. The
         Second Joint Venture may require an ultimate capitalization of up to
         $10 million depending on the nature and extent of its business
         activities which, if necessary, is expected to be financed through a
         combination of bank borrowings and equity investments contributed by
         the parties in proportion to their equity interests and on terms to be
         agreed upon.

         The Company believes that without taking into consideration revenues
         from sales of MAGICOM(R) 2000 it will have sufficient funds through the
         first quarter of fiscal 2000 to maintain its present level of
         development efforts and to make its anticipated capital contribution of
         $550,000 to the Second Joint Venture.

         The Company's estimated funding capacity indicated above assumes,
         although there is no assurance, that the waiver of salary and pension
         benefits by the Chairman of the Board, the President and senior level
         personnel will continue. The Company anticipates that it may require
         additional funds in order to participate in the Joint Ventures
         following its initial capital contributions and to continue its
         research and development activities.

         The National Association of Securities Dealers, Inc. ("NASD") requires
         that the Company maintain a minimum of $4,000,000 of net tangible
         assets to maintain its


                                       15
<PAGE>

         NASDAQ - NMS listing. The Company anticipates that it will seek
         additional sources of funding, when necessary, in order to satisfy the
         NASD requirements.

         The Company currently has no plans with respect to additional
         financing. There can be no assurance that adequate funds will be
         available to the Company, SCE, or the Second Joint Venture, including
         any future capital contribution, if any, beyond its initial capital
         contributions of $1,225,000 to SCE and the anticipated capital
         contribution of $550,000 to the Second Joint Venture, and its NASD
         funding requirements, or that, if available, the Company, SCE, or the
         Second Joint Venture, will be able to obtain such funds on favorable
         terms and conditions.


                           PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

                  (a)      Exhibits

                           10 -     Contract Granting Land-Use Rights, dated
                                    October 11, 1995, between the Land
                                    Administration Bureau Songjiang County and
                                    Shanghai CopyTele Electronics Co., Ltd.

                           27 -     Financial Data Schedule

                  (b)      Reports on Form 8-K.

                           No reports on Form 8-K were filed for the Company
                           during the quarter ended January 31, 1997.


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.





                                                CopyTele, Inc.



                                                DENIS A. KRUSOS
                                                ---------------
                                                Denis A. Krusos
                                                Chairman of the Board,
                                                Chief Executive Officer
                                                and Director (Principal
March 14, 1997                                  Executive Officer)



                                                FRANK J. DISANTO
                                                ----------------
                                                Frank J. DiSanto
March 14, 1997                                  President and Director



                                                GERALD J. BENTIVEGNA
                                                --------------------
                                                Gerald J. Bentivegna
                                                Vice President - Finance and
                                                Chief Financial Officer and
                                                Director (Principal Financial
March 14, 1997                                  and Accounting Officer)



                                       16
<PAGE>
                                 EXHIBIT INDEX

Exhibit             Description
-------             -----------

10 -     Contract Granting Land-Use Rights, dated October 11, 1995, between the
         Land Administration Bureau Songjiang County and Shanghai CopyTele
         Electronics Co., Ltd.

27 -     Financial Data Schedule